Now the same principle is being applied to stymie the emergency of another set of companies in the transportation sector -- cloud-driven ride-sharing services.

Ridesharing -- also known as carpooling -- involves members of the public contacting each other via a smartphone or PC internet networking service and arranging to ferry each other to various destinations for fees. The practice in informal form is almost as old as the automobile itself, but in the digital age app-enabled ridesharing has seen an explosion in interest, threatening the commercial taxicab industry and the city officials who depend on that industry for revenue.

Uber is among the pioneering startups in cloud apps for paid carpooling/ridesharing.
[Image Source: Uber]

California often is characterized as a leader in onerous regulation, but at times it can flirt with being laissez-faire.

On a state level, that has been the case with ride-sharing. Many companies in the field are based in California and rolled out their first services in the state. Startup ridesharing services Sidecar, Uber, and Lyft are all based in San Francisco, Calif.

After initially threatening fines against these in-state startups, the California Public Utilities Commission (CPUC) backed down and agreed to create a new regulatory category [PDF] -- "Transportation Network Companies". While perhaps not as good as no regulation at all, the move has allowed the service to grow within California without fear of being banned at the behest of the threatened taxicab lobby.

All of the ride-sharing companies operate on the same principle, claiming that their fares are "voluntary" and admittedly fluctuating based on supply and demand. Because they aren't charging rigid rates, they claim they are not subject to local ordinances in various cities that require taxicabs to pay per-cab tolls to city transportation departments/agencies.

Cities transportation agencies are pretty upset about not getting their cut of the pie. They've circled the wagons in many jurisidictions, backed by the traditional taxicab industry who views these disruptive new players as an unlawful threat.

II. Philadelphia Shows Sidecar Drivers no "Brotherly Love"

The funny thing is that many cities supported ride-sharing as part of "eco-concious" initiatives when it was on a smaller scale and largely greenwashing. But once it expanded and money became involved many cities had seen enough.

Sidecar -- a Google Inc. (GOOG) funded venture -- opened operations in Philadelphia, Penn., the "City of Brotherly Love" in late 2012. But of late there's been little love for the disruptive startup from the city government.

In 2013 the Philadelphia Parking Authority (PPA) -- a city authority that derives its revenue from taxicab licensing -- decided it was time to put a stop to the business, which hadn't paid its toll. It conducted a sting, seizing cars, ticketing drivers, and shutting down the operation. Marty O’Rourke a PPA spokesman told TechCrunch:

[Sidecar drivers are] passing themselves off as taxis and they’re not. It’s clearly not about technology. This is about public safety. [The sting] was an operation to impound vehicles because they were operating illegally. If we find them out there again, we’ll impound them again.

Sidecar vigorously disagreed. It points out that its drivers don't claim to be taxi drivers and are simply engaging in the time honored practice of carpooling with a small fee for the time and gas.

This month Sidecar was in court to try to defend itself, but it has yet to win the right to deliver services again or get some of its property back in Philadelphia.

III. Gotta Ban 'em All

Likewise Austin, Texas saw outcry from taxicab drivers who successfully petitioned the Austin City Council to in Feb. 2013 send cease and desist letters to the ride-sharing service ahead of the yearly South-by-Southwest (SXSW) festival. Sidecar took advantage of the publicity, offering rides for free to spite city regulators. But later in 2013 it had basically ceased operations in the city. It's trying to petition the City Council to reconsider via a Change.org petition (which closed with 3,727 signatures), and local business leaders have also asked the council to change its mind. But so far there has been no breakthrough.

Sidecar's last opportunity for action in Austin is the courts, where it filed a lawsuit in Mar. 2013. Company VP Margaret Ryan blogs:

This lawsuit is bigger than Austin, Texas. What happens here matters for the entire sharing economy. Sharing resources is not a crime – it’s a solution for a better and more sustainable way of life. Rideshare is good for Austin and we’re going to defend this position in Austin City Court.

Uber, Lyft, and Sidecar all operate in Seattle, but in February the city council passed an ordinance that Sidecar says will effectively ban ridesharing in the city, if it takes effect. That oridinance does not outright prohibit ridesharing, but limits each company to 150 passengers/drivers on the road at once.

Minneapolis, Minn. in Feb. 2014 announced it would ban/ticket any Lyft drivers who did not file for expensive taxicab licenses and would do likewise for participants in any other popular ride-sharing service.

Taxicab unions protest against Uber, Lyft, and Sidecar in San Francisco -- unregulated by the government, means a product is unsafe, they say. [Image Source: AP]

In New York City -- where taxicab licenses ("medallions') cost up to $1M USD -- crackdowns are also picking up steam. Efforts are also under way to ban the services in Las Vegas, Nev., Washington D.C., Chicago, Ill., and Cambridge, Mass.. In short the number of cities where paid carpoolers can legal operate is dwindling at an alarmingly rapid rate.

At this point quite literally the risk of carpooling is becoming that you will get your car impounded/seized and be forced to pay steep fines.

IV. California City Officials: If Paid Carpooling is Allowed Taxi Businesses Will Fail

But perhaps the most dire sign for Uber, Sidecar, and Lyft is that in their home state -- where they supposedly "won", local officials are threatening to do what state officials would not -- ban ridesharing.

Officials at the San Francisco International Airport in April 2013 banned the ridesharers from picking up or dropping off passengers at the airport.

These rogue taxis are bypassing all safety regulations created to protect riders and drivers. Not only are these high-tech bandit cabs unsafe, they are breaking regulatory standards and disenfranchising safe, legal taxi drivers.

Lyft landed in LA -- and was promptly ordered to get out. [Image Source: Lyft]

And in San Francisco this month, city officials and taxicab drivers were eyeing a knockout blow to the carpoolers. Comments Supervisor John Avalos:

Mark Gruberg, a spokesman for United Taxicab Workers, claims that carpoolers are a menace to society, stating:

People are being injured while they are fiddling, and their rules do not protect the public. These are taxicabs in every sense of the word.

Lyft is too successful a business to be permitted, regulators argue. [Image Source: SF Examiner]

Critics are using a New Years Eve incident as a rallying cry. On Dec. 31, 2013, a 6-year old in San Francisco was struck and killed by an Uber driver. The driver was not transporting anyone at the time, but taxicab unions and the city departments that profit off them have gleefully seized upon the death as evidence that carpooling is "unsafe".

Government has no more important responsibility than to provide for public safety, and many of our laws are for this purpose, including regulations covering vehicles for hire.

Because there is a clear potential for harm to life and limb when individuals are transported in automobiles by strangers, the reasons for regulating vehicles for hire, such as taxicabs and limousines, are obvious and crucial. Accordingly, there is a compelling need for government oversight and standards pertaining to all aspects of the vehicle for hire business.

Cab unions say if cities allow a free market and allow citizens to use their cars for carpooling businesses, they won't be able to stay in business. [Image Source: LA Times]

Chris Dolan, the San Francisco lawyer who is suing Uber over the New Year's Eve death comments to Mr. Hewlett:

New technology does not eliminate well-established legal principles.

The Uber driver's New Year's Eve accident may have given taxicabs unions and their government buddies just enough PR firepower to kill the ridesharing market. [Image Source: SF Chronicle]

But if carpooling is illegal, the question becomes where should the government stop. After all, what about a roommate who gives you money for a ride to the grocery store? What about a group of friends who pool their money to go to a concert? If app-connected carpooling is illegal, aren't those people also breaking the law?

Mr. Hewlett didn't write about such examples, but he did compare Uber, Lyft, and Sidecar to Napster, the infamous P2P company that based its business on stealing musicians' copyrighted work.

Will Lyft and others be destined for a slow, sad ride into the sunset? [Image Source: Lyft]

No matter how crazy that comparison it is, it's not atypical. Ride sharing and carpooling for pay in the U.S. -- once a booming field of dreams -- has been methodically shut down and beaten back by the loving hand of government regulators and taxicab industry. Thanks to those cartels, this once thriving sector is now on the death's door, as the nation's top cities approach a ubiquitous ban on sharing, which they say is anything but caring.

quote: If their standards are so high why are they not licensing themselves properly? Where in your article does it say they were precluded from becoming properly licensed taxi companies? The government stepped in long ago and made these laws, plenty of companies do business abiding by them. It's these and only these companies who have come along and broken them, and they are being excluded because they are unlicensed, illegal taxi operations.

You really don't get it? It's not that hard to understand...

Simple... $$

If I'm giving people rides 3-5 times a week in NYC because I enjoy the company and making up for my massive parking costs, I may be a great driver and have an immaculately clean car. But do I have $1M USD to get properly licensed?

If "getting properly licensed" was free, sure I get your argument.

But it never is. For any large city the transit authority gets thousands -- if not tens or hundreds of thousands (or in NYC's case millions) of dollars per taxicab per year. It has very little to do with good driving or clean cabs, or safety.

Cabbies hit people all the time. Cabbies have killed people. Many cabs are filthy. Many cabs are old. Many cab drivers are horrible drivers.

That's not what "licensing" is about.

Licensing is a protectionist racket. City officials agree to ban and exclude casual competitors (no matter what their merits), taxicab businesses pay up for their local anticompetitive protections.

Of course any time you rig the market quality suffers.

The reason why Uber, Lyft, Sidecar, Heyride, etc. are doing so well is that their drivers mostly actually speak English well, have clean, new cars, are friendlier, and drive safer than cab drivers.

But because they aren't willing to pay more money than they earn to get in on the licensing racket, they're getting banned.

Your xenophobia is hilarious. How dare those immigrants come to our country and get jobs driving people around? Earning money for driving people around should be reserved for internet startups and rich white people with free time on their hands.

Sure lets just let anyone come along and claim they are exempt from the law because they use a computer. Screw it if the city is out millions of dollars, they can just tax the average person more instead of the companies that profit on their streets.

Why should we prevent the average Joe from using his minivan as a bus? Why should we prevent any average man with a hammer from being a carpenter? Those laws are just there to protect carpenters.

You are such a goddam hack, how long till you reverse on this like you reversed on bitcoin?

quote: Your xenophobia is hilarious. How dare those immigrants come to our country and get jobs driving people around?

You couldn't be more off base. I'm a strong support of diversity and the right to immigrate -- a foundation of this nation.

Exactly where did I say immigrants should not get jobs or that I opposed immigration??

I support immigration. I don't think you have to oppose immigration, just because you believe that employees in occupations that require a lot of human interaction should have reasonable proficiency in the language of the land.

If I moved to Sweden, I'd expect people would be irritated at me if I became a taxi driver and didn't bother to learn the local language fully.

quote: Earning money for driving people around should be reserved for internet startups and rich white people with free time on their hands

Again you're making ridiculous leaps from what I actually said. What does being white have to do with speaking English and being friendly and approachable?

I know plenty of African, Asian, Hispanic, and people of a variety of other ethnicities who can all speak English clearly and interact with people in friendly fashion.

It is entirely accurate that my opinion is that human services jobs are best staffed by citizens who have strong conversation skills in the primary language of the land. However, I have no biases when it comes to the race of the employees. To suggest otherwise is a pure bullsh-t.

In the U.S. the primary language is English. If you can't speak English well (which is true of at least a third of the cabbies I've encountered personally) I'd advise you not to take a job that requires a high level of banter and interaction skills i.e. the transportation sector.

It'd make a lot more sense to go to technical college and go into IT or some other job that requires less human interaction, giving you the time necessary to learn the language of the land and properly immigrate.

Do you honestly think that's it's xenophobic to want people to proficiently speak the majority language of their nation of choice?

If you think that's unreasonable, too bad I guess, because most people around the world think you're wrong.

quote: Why should we prevent the average Joe from using his minivan as a bus? Why should we prevent any average man with a hammer from being a carpenter? Those laws are just there to protect carpenters.

Really, you believe the government should ban people from using hammers to do their own carpentry?

That has to be one of the most alarmingly outlandish statements I've ever read here... and that's saying something

Jason you just fell prey to the typical liberal\progressive attack strategy. Insult you, lie about what you said and use abusive language in the process. Saul Alinsky playbook 101 followed perfectly. Xenophobe is one of their favorite name calling cards. They come out of the wood work when you question the government controlling every part of your life, or trying to suck every penny out of you to line the pockets of their friends and supporters.

quote: It is entirely accurate that my opinion is that human services jobs are best staffed by citizens who have strong conversation skills in the primary language of the land. However, I have no biases when it comes to the race of the employees. To suggest otherwise is a pure bullsh-t.

In the U.S. the primary language is English. If you can't speak English well (which is true of at least a third of the cabbies I've encountered personally) I'd advise you not to take a job that requires a high level of banter and interaction skills i.e. the transportation sector.

interaction is optional with a cab driver. You give them the address or the passenger punches it in the screen and then the driver starts driving.

They dont have to ask about your trip the same way a hairstylist doesnt havent to ask you about how crappy your day is.

The problem is everyone overcomplicates everything now a days. Now we have to make sure our drivers can understand english? This is a cab driver, they aren't running your portfolio.

Just know what stop/green-yellow-red/ main street means, take me there, take your 10 bucks from me and that is all I really need you for.

You may know a bajillion people of hundreds of different races or creed, thats great. What no one ever states is that they know a family who doesn't know a lick of english but they can see they use every resource, energy or ounce of intelligence they have everyday to make up for the social handicap. Let alone say that it is admirable.

believe me, if they were given an option of what nationality vagina they wanted to be pushed out of,they would have all said 'merica.

Don't you DARE try to screw in a lightbulb, Jason! Didn't you know you NEED to be certified to do that? They are hooked up to electricity for heaven's sake! You might get electrocuted or worse, slip on your footstool and injure yourself!

Call your electrician immediately! He needs to be licensed, bonded charge a minimum fee of 350.00 for the service call. But no worries. Your lightbulb will be replaced perfectly with no risk to yourself and you can go about your day focusing on more productive things...

... Like figuring out how you're going to pay a damn electrician 350.00 to screw in a ten dollar bulb.

quote: But it never is. For any large city the transit authority gets thousands -- if not tens or hundreds of thousands (or in NYC's case millions) of dollars per taxicab per year.

You'd make a more convincing argument if you actually understand how taxi medallions worked in NYC. A medallion is a one time price, the T&L does not get 'millions' of dollars per taxicab per year. That would be economically impossible, since an average cab grosses maybe 100K/year.

When a medallion is sold NYC only releases whatever taxes are due it as if it was any other sale. The only time it receives money directly is when it actually auctions off new medallions. I believe NYC has not had a medallion auction since 2011.

Exactly...And it's also the difference between a company with a ton of employee's (taxi drivers) versus Joe Blow heading that direction anyway and wants some gas/parking money where both the driver and the passenger win. About the only thing to regulate is those that are trying to earn a undocumented living just doing this stuff. At that point, it looks like a duck and an IRS audit or your tax forms would clear it up whether or not this is your 'job'.

Just because I make a pot of coffee in the morning in which my co-workers pitch in so we can get some decent brew doesn't mean I need corporate license and a Starbucks franchise license. Yet if I construct a kiosk in the lobby... it's a different beast.

At one time there was no regulation of taxi drivers, and then along came some extra horrific crime or other, and everyone went "Eeeek ... that driver has a criminal file as long as your arm, how did he get to be a taxi driver for 10 years" or such like, and so the US lawmakers would have followed other countries and introduced laws that said taxi drivers have to be regulated.The problem with this type of internet car pooling is it enables people who are providing a taxi service to do so without abiding by the statutory obligations that a taxi has to.For example, in New Zealand, where I live, a taxi driver has to have police approval before they are allowed to carry passengers "for hire or reward". They have to display a photo ID with a unique moniker (I think that is the word) on it in a prominent place in the cab, they have to have video surveillance cameras operating inside the cab, they have to display their fares outside the cab, they have to have an area knowledge certificate to operate in that area, their taxi company has to be registered with the police, etc.Now the important part in all this is the "for hire and reward", which means that even a convicted criminal can carry friends in his car without fear, but if he wants to carry "for hire or reward", e.g. charge "petrol money", he can get charged by the police if he doesn't have their approval.So, here we have companies organising a taxi service without meeting the statutory obligations a taxi company does. For example, do these companies that organise these rides do a proper background check on the drivers they use? I'm guessing "no".

So is it your position that craigslist should be shut down, since sellers and buyers haven't gone through a background check before they posted ads and responded to them? They meet face-to-face, after all, and occasionally one murders the other.

If I'm afraid of being murdered during a craigslist transaction, I won't use craigslist (and I wouldn't be the only one). Similarly, if I'm scared of random drivers, I can take a cab. Otherwise, why should I pay more for a service (background check for drivers) that I don't necessarily want? You're saying I shouldn't be able to do something, and it's for my own protection. Why can't I decide how much danger I want to put myself in?

I'm with those that believe that this has nothing to do with anything other than protecting the taxi industry as it exists today.

No "horrific crime" came along to cause regulation of the taxi industry. What came along was a Depression. During the last Depression (as opposed to the one we are living through now) in the 1930s, the taxi industry was completely unregulated. Many unemployed people, in order to survive, turned their own personal cars into cabs. The number of taxis on the road in New York city jumped dramatically. The existing major cab companies, fearful of the competition, pressured the city government of New York City to limit the number of taxicabs on the street and protect their business interests. In exchange, the taxi companies agreed to let the taxi and limo commission regulate the industry. It was a deal between two devils with the consumer and the independent drivers as the sacrifices.Other cities, seeing what New York had done, adopted regulatory regimens themselves.The worst element of these taxi regulation schemes is the limits on the number of taxis allowed on the road by various city councils.The solution to the problem is to entirely deregulate the taxi industry and get the government as far away from it as possible.